7SEAS ENTERTAINMENT LIMITED
Report on the I nd AS financial statements
We have audited the accompanying Ind AS financial statements of M/S. 7SEASENTERTAINMENT LIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (Including other comprehensiveincome) the Statement of cash flows and the Statement of Changes in Equity for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation (herein referred to as Ind AS financial statements').
Management's Responsibility for the Financial Statements
Management's Responsibility for the Financial Statements The Company's Board ofDirectors is responsible for the matters stated in Section 134(5) of the Companies Act2013 ("the Act") with respect to the preparation and presentation of these IndAS financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inEquity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under Section 133 of the Actread with relevant rules issued there under. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe Ind AS financial statements are Free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on whether the Company has in place an adequate internalfinancial controls system over financial reporting and the operating effectiveness of suchcontrols. An audit also includes evaluating the appropriateness of the accounting policiesused and the reasonableness of the accounting estimates made by the Company's Directorsas well as evaluating the overall presentation of the Ind AS financial statements.
Impact of COVID-19:
The onset and rapid propagation of COVID-19 has caused disruptions in the operations ofbusiness units severe restrictions on travel meetings and access to client locations andother practical difficulties resulting in Distance Audit / Remote Audit / Online Audit.Further certain relief measures were announced by Regulatory Authorities to mitigate theburden of meeting Timelines and Compliance requirements brought about by disruptions andto ensure the continuity of viable businesses.
Considering the nature of the restrictions limitations regulatory requirementsexisting business environment materiality and their possible impact on the operativeeffectiveness on the critical control systems and risk of material misstatement the auditrequires significant efforts in verification planning and performing alternativeprocedures and exercise of more professional scepticism to mitigate identified risks /weakness and ensure compliance with Standards on Auditing. Further this is a matter ofhigh importance for the intended users of the financial statement. Considering theseaspects we have considered this as a Key Audit Matter. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the financialposition of the Company as at 31st March 2021 and its financial performance includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A statement on the matters specified in the paragraph 3and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) the balance sheet the statement of profit and loss and the cash flow statementdealt with by this Report are in agreement with the books of account;
d) in our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2015;
e) on the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164 (2) of the Act; and
f) With respect to the adequacy of the internal financial controls over financialreporting of the company and operating effectives of such controls refer to our separatereport in Annexure B.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2015 in our opinionand to the best of our information and according to the explanations given to us:
I. The Company does not have any pending litigations.
II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
III. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure-A to the Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the Ind AS financial statements for the Year ended 31st March 2021we report that:
1.a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner. In accordance with this programmecertain fixed assets were verified during the year and no material discrepancies werenoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.
c. There is no immovable property in the name of the company hence paragraph 3(i)(c) ofthe Companies (Auditor's Report) Order 2016 is not applicable.
2. The physical verification of the inventory excluding stocks with third parties hasbeen conducted at reasonable intervals by the management during the year. In our opinionthe frequency of the verification is reasonable.
3. The Company has not granted any loans to bodies corporate covered in the registermaintained under section 189 of the Companies Act 2013 (the Act').
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The Company has not accepted any deposits within the meaning of Sections 73 to 76 orany other relevant provisions of the Companies Act 2013 and no order has been passed byCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor any tribunal.
6. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
7. a. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including duty of excise income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory except provident fund employees' state insurance tax deducted atsource dues have been regularly deposited during the year by the Company with theappropriate authorities.
b. According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax service tax dutyof customs value added tax cess and other material statutory dues were in arrears as at31st March 2021 for a period of more than six months from the date they becamepayable except below;
|Particulars ||Demand U/s ||Period to which the amount relates ||Amount in Rs. |
|I ncome T ax Act 1956 ||143(1) ||A.Y.2007-08 ||244013 |
|I ncome Tax Act 1956 ||154 ||A.Y.2012-13 ||85300 |
|I ncome Tax Act 1956 ||154 ||A.Y.2013-14 ||235710 |
c. According to the information and explanations given to us there are no materialdues of wealth tax duty of customs and cess which have not been deposited with theappropriate authorities on account of any dispute. However according to information andexplanations given to us the following dues of income tax have not been deposited by theCompany on account of disputes:
|Particulars ||Demand U/s ||Period to which The amount relates ||Forum where the dispute is pending ||Amount in Rs. |
|Income Tax Act 1956 ||201 (1) & 201(1A) ||A.Y. 2009-10 ||The Commissioner of Income Tax (Appeals-II) ||1102613 |
8. The Company has not paid outstanding dues and interest thereon to banks at yearended.
9. The company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and terms loans during the year.
10. According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit.
11. The company has paid/ provided managerial remuneration in accordance with requisiteapprovals mandated by the provisions of section 197 read with schedule V to the act.
12. The company is not Nidhi Company and the Nidhi Rules 2014 not applicable to it.Accordingly the provisions of Clause 3(Xii) of order not applicable to the company.
13. The company has entered transactions with the related parties and complied withSection 188 and 177 of Companies Act 2013 where applicable and the details have beendisclosed in the Financial Statements etc as required by the accounting standards.
14. The Company has not issued shares or debentures on preferential basis.
15. The company has not entered into any non-cash transactions with directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of order notapplicable to the company.
16. The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act").
We have audited the internal financial controls over financial reporting of 7SEASENTERTAINMENT LIMITED ("the Company") as of March 31 2021 in conjunction withour audit of the Ind AS financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on my / our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Though the methodology of conducting audit is likely to undergo a change the objectiveof the audit does not change which requires the auditor to ensure that sufficient andappropriate audit evidence is available with the auditor based on which he is able toexpress his opinion.
In Identifying and Assessing the Risks of Material Misstatement and operatingeffectiveness of critical controls through Understanding the unit and its Environment thefollowing issues had been considered:
Operational disruption resulting in any changes to the business model.
Employees' absence or work from home.
Restrictions on travel.
Physical Access to Systems Data Documents Officials.
Inability to physically verify relevant information items and records.
Specific Considerations adopted while conducting Distance Audit / Remote Audit / OnlineAudit of the unit under current Covid-19 situation:
Obtaining the data / documents required for the purpose of conducting the auditin soft copy / scanned format.
Seeking information and representations from the management about the currentand possible future impact of disruptions to business operations.
Requesting for online presence of requisite unit officials.
Communications by email and audio conference instead of physical mode wherevernecessary.
Adopting the SOPs under Covid-19 situation and strictly complying with the governmentregulatory guidelines issued.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence I/we have obtained is sufficient and appropriate toprovide a basis for my /our audit opinion on the Company's internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".
|For Sathuluri & Co Chartered Accountants |
|FRN: 006383S |
|S S Prakash Partner |
|Membership No. 202710 |
|Place: Hyderabad |
|Date: 29.06.2021 |